The Commodity Futures Trading Commission ("Commission") has
reason to believe that Sumitomo Corporation ("Sumitomo"),
through the acts of one or more of its employees and agents, has violated
Sections 6(c), 6(d) and 9(a)(2) of the Commodity Exchange Act, as amended
("Act"). Therefore, the Commission deems it appropriate and in
the public interest that public administrative proceedings be, and they
hereby are, instituted in order to determine whether Sumitomo engaged in
the violations set forth herein and to determine whether any order should
be issued imposing remedial sanctions.

II.

In anticipation of the institution of these administrative proceedings,
Sumitomo has submitted an Offer of Settlement ("Offer") which
the Commission has determined to accept. Without admitting or denying the
findings herein, Sumitomo acknowledges service of this Order Instituting
Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange
Act and Findings Imposing Remedial Sanctions ("Order").
Sumitomo, solely by virtue of its Offer and for purposes of settling this
proceeding, before argument or adjudication of any issue of fact or law,
consents to the use of the findings contained in this Order in this
proceeding and in any other proceeding brought by the Commission or to
which the Commission is a party. Sumitomo does not consent to the use of
the Offer or this Order as the sole basis for any other proceeding
brought by the Commission, or to the use of the Offer or this Order
against it in any other proceeding by any other party. The findings
contained in this Order are not binding on any other

person or entity named as a defendant or respondent in any other
proceeding.

III.

The Commission finds the following:

A. SUMMARY

As described in more detail below, in the wake of accumulating large
losses from speculative trading, the principal copper trader for Sumitomo
engaged in a scheme, in conjunction with an entity operating in the
United States, with the intent of manipulating the price of copper. In
particular, during 1995 and 1996, Sumitomo, acting through its agent or
agents, established and maintained large and dominating futures positions
in copper metal on the London Metals Exchange ("LME"). In the
fall of 1995, Sumitomo stood for delivery on a significant percentage of
its maturing futures contracts. It thereby acquired a dominant and
controlling cash and futures market position, which directly and
predictably caused copper prices, including prices on the United States
cash and futures markets, to reach artificially high levels.
Sumitomo's agent or agents took these actions expressly for the
purpose of creating artificially high absolute prices and an artificially
high premium of nearby prices over futures prices. Sumitomo intentionally
exploited these artificially high prices in order to profit on the
liquidation of its large portfolio of futures contracts and holdings of
LME warrants. Through these actions, Sumitomo manipulated upward the
price of copper and copper futures in violation of Sections 6(c), 6(d)
and 9(a)(2) of the Act.

Sumitomo contends that its copper trader’s actions described below
were unauthorized and hidden from other company officials. The Commission
makes no findings with regard to those contentions. It believes that,
without regard to those contentions, Sumitomo is properly found to have
violated the manipulation provisions of the Act.

B. RESPONDENT

Sumitomo is a Japanese corporation with its principal place of business
in Tokyo, Japan. During the relevant period, Sumitomo was engaged, among
other things, in the marketing of copper cathode to customers throughout
the world. As part of its business of marketing copper, Sumitomo engaged
in futures and option transactions on world markets, including the Comex
Division of the New York Mercantile Exchange ("Comex") and the
LME, primarily for the purpose of "hedging" the price risks
associated with the purchase and sale of copper. These copper marketing
and trading functions were primarily carried out by the Copper Metals
Section of Sumitomo's Non-Ferrous Metals Department.

C. FACTS

1. Sumitomo's Copper Trading

Sumitomo, which was incorporated in 1919, has, together with its
historical predecessors, been involved in the marketing of copper metal
for hundreds of years. During the period at issue in this matter,
Sumitomo's copper metals business was conducted by the Copper Metals
Section of the Non-Ferrous Metals Department. The primary business of the
Copper Metals Section, or Copper Team as it was also known within
Sumitomo, was supplying copper cathode to customers (primarily in Asia),
such as cable fabricators and rod mills. In addition to sales to
customers, the business also included the extensive use of the futures
markets to hedge the price risks occasioned by the volatility of copper
prices. Both the purchase and sale of physical copper and hedging with
futures, known within Sumitomo as "dealing," were carried out
by the Copper Metals Section.

In April 1970, Sumitomo first employed an individual who, in April 1973,
was assigned to the Copper Metals Section. By 1975, that individual had
become involved in the physical purchase and sale of copper and in
dealing, under the overall supervision of the head of the Non-Ferrous
Metals Department. In August 1987, he was made head of the Copper Team.
From that time until at least his reassignment on May 8, 1996, he had
primary responsibility for both the actual physical purchase and sale of
copper and dealing in copper metal for Sumitomo. (This individual will be
referred to throughout this Order as "Sumitomo's copper
trader".)

In the period immediately prior to Sumitomo's copper trader's
appointment as head of the Copper Team and in subsequent years, the
Copper Team incurred significant losses. The losses were the result both
of the actual physical purchase and sale of copper and also of
speculative futures transactions initiated, together with another
Sumitomo employee at the time, in an unsuccessful attempt to compensate
for losses on the actual purchase and sale of copper.

Sumitomo's copper trader did not enter the unauthorized speculative
trades in Sumitomo’s normal bookkeeping system. Instead, he kept a
record of the transactions in a series of personal notebooks.

2. Sumitomo's Copper Trader's Arrangements with a U.S. Copper
Merchant

Beginning in late 1993, Sumitomo's copper trader entered into a
series of agreements with a newly-formed U.S. copper merchant firm
located in New York City, whereby Sumitomo agreed to purchase copper from
the American firm on a monthly basis for the years 1994 through 1997. The
agreements were embodied in a series of supply contracts that contained
unusual minimum price and price participation provisions. Under the
minimum price provision, Sumitomo was obligated to purchase copper at the
higher of the market price (LME settlement price) at the time of shipment
of the monthly quota or the minimum price set by Sumitomo during a
specified time period. The contracts also required the U.S. copper
merchant firm to pay Sumitomo, as price participation, thirty percent of
any positive difference between the market price at the time of shipment
and the minimum price on futures contracts established to hedge the
supply contracts. Thus, as copper prices rose above the pre-established
minimum price, the U.S firm and Sumitomo would share in the price
appreciation, giving both firms a financial interest in higher prices.

By June 15, 1994, Sumitomo’s copper trader and the U.S. copper
merchant had entered into six such minimum price contracts providing for
the delivery of 834,000 metric tons of copper, on a schedule of roughly
10,000 metric tons per month in 1994 and 30,000 metric tons per month in
1995 and 1996. On December 1, 1994, they entered into another, similar
contract for delivery of 30,000 metric tons per month in 1997. The terms
of these contracts were essentially identical and in sum called for the
delivery of a total of 1,194,000 metric tons of copper from 1994 through
1997. In 1995 and 1996, these contracts were used by Sumitomo’s
copper trader and the U.S. copper merchant to provide a justification for
Sumitomo’s purported need for copper to sell to customers. However,
fully half of the 1995 and 1996 contractual copper was immediately resold
to the U.S. copper merchant’s supplier and was never actually
delivered to Sumitomo.

As early as February 1994, Sumitomo's copper trader and personnel at
the U.S. copper merchant firm communicated about ways they could act in
concert through market operations to cause copper prices to increase.

In order to effect and synchronize their joint market operations,
Sumitomo's copper trader and the U.S. copper merchant established
several highly unusual accounts, called the "B" accounts, at a
number of brokerage houses. Under the "B" account arrangements,
Sumitomo’s copper trader authorized personnel at the U.S. firm to
effectuate LME futures trades and other copper business in Sumitomo's
name and using Sumitomo's credit. Sumitomo’s copper trader gave
the U.S. copper merchant power of attorney over the trading in these
"B" accounts pursuant to documentation on which he forged the
signatures of his superiors. Concerted market actions between the two
firms took place in the ensuing years in large part through use of the
various "B" accounts.

During this same period, Sumitomo's copper trader and personnel at
the U.S. copper merchant were in daily communication concerning the
coordination of their market activities with a view toward increasing LME
copper prices. Sumitomo's copper trader and the U.S. copper merchant
agreed that they should strive, through their purchases of physical metal
in LME warehouses and elsewhere as well as their purchases of futures and
options contracts, to inflate artificially the market price of copper to
a level that would enable Sumitomo and the U.S. copper merchant to
liquidate their large futures market position and holdings of LME
warrants at a substantial profit.

3. Efforts to Manipulate Copper Prices in 1995-96

During the summer of 1995 and through the fourth quarter of 1995,
Sumitomo's copper trader and the U.S. copper merchant plotted and
executed their scheme to push copper prices to an artificially high level
and then exit the joint operation by liquidating their massive long
futures positions and holdings of LME warrants. The focus of these
efforts ultimately was the acquisition of all of the stocks of
deliverable copper in LME warehouses. Sumitomo’s and the U.S. copper
merchant’s positions and actions during this period bore little
relationship to their legitimate merchandising needs, but rather were
specifically designed to cause artificial prices and price relationships.

In the fall of 1995, Sumitomo's copper trader authorized the
acquisition of 100% of LME warehouse stocks by Sumitomo, with the U.S.
copper merchant, and set out detailed instructions for the management of
Sumitomo's large portfolio of futures positions. As Sumitomo's
copper trader knew, the concentration of ownership of all, or essentially
all, of the LME warehouse stocks in the hands of cooperating market
participants and the withholding of such stocks from the market would
have the effect of increasing the price of copper and also creating a
large backwardation. These developments allowed Sumitomo’s copper
trader to liquidate, lend or roll forward Sumitomo’s large market
holdings at the higher price or price differential and thereby earn
significant profits for Sumitomo.

Pursuant to the plan, beginning in late October 1995, Sumitomo, through
its copper trader, rapidly increased its ownership and control of LME
deliverable warehouse stocks. By November 24, 1995, Sumitomo owned 93% of
all LME warehouse stocks through one brokerage house alone. Combined with
holdings at other brokerage houses, Sumitomo, together with the U.S.
copper merchant, owned and controlled up to 100% of LME stocks (including
in the LME warehouse in Long Beach, California) at various times in the
fourth quarter of 1995. Sumitomo also maintained large and controlling
LME futures positions during the fourth quarter, which Sumitomo and
personnel at the U.S. copper merchant managed in a manner that bore
little legitimate relationship to the marketing of physical copper to
Sumitomo's customers, but rather were specifically designed to cause
artificial prices and price relationships.

At the same time, cash copper prices increased sharply as did the
backwardation of cash to three-month forward prices. Once these
artificial prices and price relationships were attained, Sumitomo reaped
substantial profits by a combination of lending forward and outright
sales of positions.

Sumitomo's dominance and control of physical stocks as well as its
maintenance of large futures market positions persisted into spring 1996.
Beginning with the announcement of the reassignment of Sumitomo’s
copper trader in May 1996, Sumitomo’s market dominance began to
decline. Thereafter, copper prices dropped from highs of around $2,800
per metric ton to below $2,000 per metric ton after the announcement of
his dismissal. These price levels persisted for several months
thereafter.

4. Impact on Prices and Markets in the United States

The impact on prices and markets in the United States from
Sumitomo's conduct was direct and flowed from the well-established
and well-known pricing relationships that exist between the LME and the
U.S. cash and futures markets. First, the trading on Comex was directly
affected. This was particularly true once the LME established its
warehouse in Long Beach, California. During those periods of time when
the LME price was manipulated into a premium over the Comex price, stocks
in the United States were drawn away from Comex-designated warehouses
(principally in Arizona) to LME warehouses (principally in Long Beach,
California). Most importantly, the artificial prices and backwardation of
prices on the LME also caused prices on the Comex to become similarly
distorted and artificial as arbitrage trading between the LME and the
Comex brought Comex prices higher than they otherwise would have been.
Moreover, because copper contracts are generally priced by reference to
the LME price or the Comex price, Sumitomo's conduct caused distorted
and artificial pricing of copper, including throughout the United States
cash market.

D. VIOLATIONS OF SECTIONS 6(c), 6(d) AND 9(a)(2) OF THE ACT

Sumitomo, like any company or entity, acts through its employees or
other agents. In this instance, Sumitomo contends that the actions that
were taken by Sumitomo’s copper trader were taken without
authorization or knowledge of his superiors. As noted earlier, the
Commission makes no findings with regard to that contention.
Nevertheless, the Commission is satisfied that pursuant to Section
2(a)(1)(A)(iii) of the Act, 7 U.S.C. § 4, the "act[s],
omission[s] or failure[s]" of Sumitomo’s copper trader and any
other agents or employees of Sumitomo in connection with the events
described in this order are properly deemed those of Sumitomo. Thus, as
discussed in more detail below, in pursuing the course of action set
forth above, Sumitomo attempted to manipulate and did manipulate upward
the price of copper in interstate commerce and for future delivery on or
subject to the rules of a contract market, in violation of Sections 6(c),
6(d) and 9(a)(2) of the Act, 7 U.S.C. § 9, 13(b)and 13(a)(2).

As the United States Court of Appeals for the Eighth Circuit stated,

We think the test for manipulation must largely be a

practical one if the purposes of the Commodity Exchange

Act are to be accomplished. The methods and techniques

of manipulation are limited only by the ingenuity of man.

The aim must be therefore to discover whether conduct has

been intentionally engaged in which has resulted in a price

which does not reflect basic forces of supply and demand.

Cargill, Inc. v. Hardin, 452 F. 2d 1154, 1163 (8th Cir. 1971).

The Commission has set forth the following elements of manipulation:

(1) that the [respondent] had the ability to influence

market prices;

(2) that [the respondent] specifically intended to do so;

(3) that artificial prices existed; and

(4) that the [respondent] caused an artificial price.

In re Cox, [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH)

& 23,786, at 34,061 (CFTC July 15, 1987).

First, Sumitomo certainly had the ability to influence market prices.
Sumitomo held massive futures positions and ultimately acquired virtually
total ownership of LME warrants. Sumitomo strategically withheld these
physical holdings from the marketplace until prices rose to levels that
were consistent with Sumitomo's trading objectives. Copper prices
rose to artificial levels to attract new supplies not already controlled
by Sumitomo to satisfy Sumitomo's continued demand for copper.

Second, the Commission has long recognized that the intent to create an
artificial or distorted price is the sinequanon of
manipulation. In the Matter of Indiana Farm Bureau Cooperative
Association, Inc.,[1982-1984 Transfer Binder] Comm. Fut. L. Rep.
(CCH) &21,796, at 27,282 (CFTC December 17, 1982). In the words of
the Fifth Circuit, "there must be a purpose to create prices not
responsive to the forces of supply and demand; the conduct must be
calculated to produce a price distortion." Volkart Brothers, Inc.
v. Freeman, 311 F. 2d 52, 58 (5th Cir. 1962). Manipulation is, at
bottom, "the creation of an artificial price by planned action,
whether by one man or a group of men." General Foods Corp. v.
Brannan, 170 F. 2d 220, 231 (7th Cir. 1948), cited with approval in
Indiana Farm, ¶21,796 at 27,281.

It is clear that Sumitomo, through its agent or agents, intentionally
acquired and maintained a dominant and controlling position in both the
physical supply of deliverable LME warehouse stocks and in maturing LME
futures positions. At various times within the period in question,
Sumitomo owned virtually all deliverable LME copper stocks. These
positions were not intended to meet Sumitomo's legitimate commercial
needs. The intent motivating the acquisition and control of both the cash
market positions and the futures market positions was expressly to create
artificially high absolute prices and artificially high and distorted
premium of nearby prices over futures prices. Sumitomo deliberately
exploited its market dominance in order to profit when market prices
became artificially high, as Sumitomo had foreseen and planned.

Third, artificial prices existed. Sharp price and backwardation
increases resulted from Sumitomo's acquisition of dominant cash and
futures positions which were not related to their legitimate commercial
needs. As the Commission has observed, when a price is affected by a
factor which is not legitimate, the resulting price is necessarily
artificial. See Indiana Farm,&21,796, at 27,282 n.2.

Finally, it is clear that Sumitomo's conduct was at least a
substantial cause of these artificial prices. As Sumitomo's
acquisition of stocks increased, LME prices increased sharply and went
into a steep backwardation which rose to over three hundred dollars. As a
result, copper moved from Comex warehouses in Arizona to the LME
warehouse in California. Moreover, by virtue of arbitrage trading and
other factors linking the trading of copper on the Comex with that on the
LME, Sumitomo's activity caused the upward manipulation of copper
futures prices on the Comex. Because copper contracts are generally
priced based on the LME price or the Comex price, Sumitomo's actions
manipulated the prices in the cash markets, including in the United
States cash market. As noted earlier, these manipulative effects on
prices in interstate commerce were direct, and any knowledgeable
participant in copper trading would know they would result from
Sumitomo’s conduct, since they flowed from the well-established and
well-known pricing relationships between the LME and the U.S. markets.
These effects were certainly readily foreseeable and apparent, and
Sumitomo knew, through its agent or agents, that this conduct would cause
injury in those markets.

Sumitomo’s conduct, therefore, satisfies all of the requisite
elements of the offense of price manipulation.

IV.

In the course of the Commission's investigation of this matter,
Sumitomo’s management has provided substantial cooperation to the
Commission in important respects. The company fully informed and
cooperated with the Commission and other international regulatory
authorities, including Japanese authorities, in connection with
Sumitomo’s public revelation in June 1996 of its large positions and
related losses in the copper market. At the Commission staff’s
request, the company announced its intention to stand behind contracts
that were traded by the U.S. copper merchant, and the company ultimately
reported a significant cost associated with the unwinding of those
contracts. The company also provided the Commission voluntarily with
certain important information during the course of the investigation. It
might have been difficult, if not impossible, for the Commission
otherwise to obtain at least some of this information, particularly
taking into account that Sumitomo is a foreign corporation.

The Commission also recognizes that the company has suffered significant
losses in the wake of the collapse of the scheme underlying this action
and that it faces continued exposure in private litigation. It has
reported losses of $2.6 billion as a result of the matters discussed in
this Order. Finally, Sumitomo's copper trader has stated that he took
certain steps to hide aspects of his conduct from other company officials
and the Commission notes that there have been indications that he may
have personally profited from his conduct. Sumitomo has sued him in Japan
for purportedly transferring millions of dollars that properly belonged
to the company.

On the other hand, the conduct described above imposed enormous costs on
traders, manufacturers, retailers and consumers of copper. The Commission
believes that the conduct described in this Order was part of a course of
conduct that extended over a much longer period of time.

Even acknowledging Sumitomo's copper trader's acts of deception,
the Commission agrees with the Japanese court that stated, in the course
of sentencing Sumitomo's copper trader to an eight year term of
imprisonment, that Sumitomo's internal monitoring systems were
inadequate, that "the company developed no effective system for
controlling the action of the dealing team," and that "such
system was one cause for this case." Company officials overlooked
signs of the copper trader’s misconduct. Various warnings from
information in the marketplace and from Sumitomo's copper
trader's actions of which company officials were aware provided
Sumitomo with the opportunity to address Sumitomo's copper
trader's actions. It did not heed those warnings or address those
actions. As the Japanese court put it, "Sumitomo just considered the
amount of profit that [Sumitomo's copper trader] showed, and trusted
[Sumitomo's copper trader] too much, and left an insufficient
monitoring system, and allowed [Sumitomo's copper trader] to be in
his position for a long time, and thus it can be said that Sumitomo just
sought profit too single-mindedly, and did not take care of the control
for [sic] risk management. Sumitomo's responsibility is not
small."

The Commission has taken all of these factors into account in its
decision to accept Sumitomo’s Offer of Settlement, which it believes
strikes an appropriate balance among these considerations. The civil
monetary penalty imposed on Sumitomo approximates the extent of
Sumitomo's gains as a result of the manipulative scheme. Considering
the breadth and impact of the conduct in question, that is appropriate.
At the same time, the civil monetary penalty is significantly less than
what the statute would provide if the matter were litigated to a
successful conclusion. See 7 U.S.C. §§ 9, 13(b)
(providing for a civil monetary penalty of not more than the higher of
$100,000 per violation or triple the monetary gain from the violation).
The mitigating factors as well as the benefits to the Commission of
resolving this matter prior to filing and the lengthy proceeding that
would thereafter ensue justify this result.

V.

FINDINGS OF VIOLATIONS

Based on the foregoing, the Commission finds that Sumitomo violated
Sections 6(c), 6(d) and 9(a)(2) of the Act, as amended, 7 U.S.C. §
9, 13(b) and 13(a)(2).

VI.

OFFER OF SETTLEMENT

Sumitomo has submitted an Offer of Settlement in which, without
admitting or denying the allegations or the findings herein, it:
acknowledges service of the Order; admits jurisdiction of the Commission
with respect to the matters set forth in this Order and for any action or
proceeding brought or authorized by the Commission based upon violations
or for enforcement of the Order; waives service of a complaint and notice
of hearing, a hearing, all post-hearing procedures, judicial review by
any court, any objection to the staff’s participation in the
Commission’s consideration of the Offer, any claim of double
jeopardy based on the institution of this proceeding or the entry of any
order imposing a civil monetary penalty or other relief, and all claims
which it may possess under the Equal Access to Justice Act, 5 U.S.C.
§504 (1994) and 28 U.S.C. §2412 (1994), as amended by Pub. L.
No. 104-21, §§231-32, 110 Stat. 847, and Part 148 of the
Commission’s Regulations, 17 C.F.R. §§148.1 et
seq., relating to, or arising from, this action; stipulates that the
record basis on which this Order is entered consists solely of this
Order, including the findings in this Order; and consents to the
Commission’s issuance of this Order, in which the Commission makes
findings, including findings that Sumitomo violated §§6(c),
6(d), and 9(a)(2) of the Act, and orders that Sumitomo cease and desist
from violating the provisions of the Act it has been found to have
violated, that it pay a civil monetary penalty of one hundred twenty-five
million dollars ($125,000,000) within twenty (20) business days of the
entry of this Order, that it pay an additional twenty-five million
dollars ($25,000,000) into escrow within twenty (20) business days of
entry of this Order, to be paid either as restitution of damages
proximately caused by virtue of the conduct underlying the violations
found in the Order, in the manner set forth in this Order, or as part of
the civil monetary penalty, also in the manner set forth in this Order,
and that it comply with its undertakings.

VII.

ORDER

Accordingly, IT IS HEREBY ORDERED THAT:

1. Sumitomo shall cease and desist from violating §§ 6(c),
6(d) and 9(a)(2) of the Act;

2. Sumitomo shall pay of a total amount of One Hundred Fifty Million
Dollars ($150,000,000USD), consisting of:

One Hundred Twenty-Five Million Dollars ($125,000,000USD) as a civil
monetary penalty, pursuant to Section 6(c) of the Act, which shall be
paid in accordance with the terms of paragraph 3, below; and

Twenty-Five Million Dollars ($25,000,000USD), which may be used
within the time limitations and in accordance with the procedures set
forth in paragraph 4 below, solely to pay restitution of damages
(including where characterized as damages) pursuant to Section 6(c)
of the Act, determined or alleged to be proximately caused to private
claimants by virtue of the conduct underlying the violations found in
the Order and, for those same claimants only, by virtue of similar
conduct occurring at other times prior to June 30, 1996; and after
the expiration of those time limitations, any remaining part of the
Twenty-Five Million Dollars ($25,000,000USD) shall become part of the
civil monetary penalty pursuant to Section 6(c) of the Act, in
accordance with the terms of paragraph 4, below.

3. Sumitomo shall deposit the civil monetary penalty of One Hundred
Twenty-Five Million Dollars ($125,000,000USD) by electronic funds
transfer to the account of the Commission at the United States
Department of the Treasury within twenty (20) business days of entry of
this Order. Such payment shall be made in a manner authorized by the
Commission and in accordance with United States Treasury regulations
and shall be accompanied by a letter that identifies Sumitomo and the
name of this proceeding. A copy of the cover letter and proof of
payment to the United States Treasury shall be simultaneously
transmitted to the Director of the Division of Enforcement (the
"Division") of the Commission (the "Director").

4. Sumitomo shall deposit the remaining Twenty-Five Million Dollars
($25,000,000USD) (together with any interest thereon, the "Escrow
Funds"), within twenty (20) business days of the entry of the
Order, into an insured escrow account (the "Escrow Account")
established at Citibank, N.A. ("the Escrow Agent"), which
shall serve as escrow agent over the Escrow Funds, and which may
appoint the law firm of Shutts & Bowen, LLP, Miami, Florida, shall
serve as administrator thereof (the "Administrator") to
fulfill the obligations of paragraph 4b, and they which shall follow
the instructions set forth below:

a. The Escrow Funds shall be invested in the CitiFunds U.S. Treasury
Reserves Money Market Account, which is a fund fully backed by
short-term U.S. Treasury obligations.

b. The Administrator shall take all necessary steps to enable the
Escrow Funds to be a taxable "settlement fund," within the
meaning of Internal Revenue Code §468B and regulations
thereunder, including the filing of the elections and statements
contemplated by those provisions. The Administrator shall file all
necessary federal, state and local tax returns for the Escrow Funds
and shall pay any appropriate taxes as a "qualified settlement
fund," within the meaning of Treasury Regulations 1.468B-12, et
seq., 26 C.F.R. 1.468B-12 et seq., from the Escrow Funds.

c. As used in this Order:

(1) a "Covered Action" is a lawsuit against Sumitomo
and/or its officers, directors, employees or subsidiaries
(collectively, the "Sumitomo Defendants") by one or more
private claimants in the courts of the United States or of any
state of the United States that seeks recovery from the Sumitomo
Defendants for losses or injuries that the claimant(s) allege were
caused in whole or in part by activities of the Sumitomo Defendants
or their agents during a period which includes some or all of the
period from June 1, 1995 to May 31, 1996, that affected (a) the
price of copper in (i) a cash market, (ii) a futures market, (iii)
an options market; and/or (b) the price of any product containing
copper. Without limiting the foregoing, each of the following
pending actions is deemed a Covered Action for the purposes of this
Offer: (1) In re Sumitomo Copper Litigation, 96 Civ. 4584
(MP), and Polansky v. Sumitomo Corporation of America, et
al., 97 Civ. 5372 (MP), pending in the United States District
Court for the Southern District of New York; and (2) Heliotrope
General, Inc. v. Sumitomo Corporation, et al., Case No.
007011679, and R.W. Strang Mechanical v. Sumitomo
Corporation, et al., Case No. 007011680, pending in the
Superior Court of the State of California for the County of San
Diego (together referred to as the "Pending Class
Actions").

(2) The "Effective Period" shall be the period that ends
four (4) years from the date of entry of the Order, provided,
however, that such period shall be tolled for a Covered Action, as
defined below, during the period after that a Settlement Agreement
in that Covered Action has been executed and before the entry of a
final, non-appealable order disapproving, overturning, setting
aside or otherwise nullifying a Settlement Agreementis in effect;

(3) A "Settlement Agreement" is an agreement, including
in the form of an agreed-to proposed order or stipulation, in a
Covered Action that (1) resolves (or, if approved by a court, will
resolve) some or all claims against one or more of the Sumitomo
Defendants; and (2) if court approval of the agreement, proposed
order or stipulation is required by Fed. R. Civ. P. 23(e) or any
analogous state statute, provides that any amounts paid to a
Covered Action Fund (as defined below) from the Escrow Account
shall revert to the Escrow Account if and when a final,
non-appealable judgment or order is entered disapproving,
overturning, setting aside or otherwise nullifying the settlement
agreement.

(4) A "Covered Action Fund" is an escrow or
court-administered fund established for the benefit of the private
claimants pursuant to a Settlement Agreement.

(5) A "Final Disposition" is a final, non-appealable
judgment or order that finally disposes of a Covered Action with
respect to one or more Sumitomo Defendants.

d. The Escrow Agent shall make, at Sumitomo’s written request,
a payment for the purposes specified in Section 2b, above, required
to be made by Sumitomo pursuant to a Settlement Agreement or Final
Disposition made or entered within the Effective Period, no later
than ten (10) days after satisfaction of all of the following
conditions, to the persons, entities or accounts set forth in the
Settlement Agreement or Final Disposition, in an amount equal to the
lesser of (i) the amount requested by Sumitomo; or (ii) the remaining
Escrow Funds (after payment of all fees to the Escrow Agent and
Administrator pursuant to paragraph 4h below, and taxes or reserves
therefor, as specified in paragraph 4b above):

(1) the private action is a Covered Action;

(2) if the action is not one of the Pending Class Actions, a copy
of the pleadings has been provided to the Escrow Agent;

(3) if the payment is pursuant to a Final Disposition, the
judgment with proof of entry by the court has been provided to the
Escrow Agent;

(4) if the payment is to a Covered Action Fund pursuant to a
Settlement Agreement in a class action (including, but not limited
to, the Pending Class Actions), the Settlement Agreement (and a
copy of the relevant escrow agreement, if applicable) in connection
with the Covered Action Fund has been provided to the Escrow Agent.
Upon the entry of a Final Disposition in such matter, Sumitomo
shall advise the Escrow Agent of the Final Disposition in such
matter and shall provide a copy of such Final Disposition and proof
of entry to the Escrow Agent; and

(5) the payment has been approved by the Commission as consistent
with the terms of its Order, and the Commission has informed the
Escrow Agent in writing of its approval.

e. Sumitomo shall submit to the Division a copy of any request to
make any payment from the Escrow Funds (other than a payment pursuant
to paragraph 4h) along with any supporting documentation, on or
before the date Sumitomo submits such request and documentation to
the Escrow Agent. Sumitomo shall provide additional information
reasonably requested by the Division as needed for the Commission to
determine if it should approve the payment as consistent with the
terms of the Order. The Escrow Agent shall not make any requested
payment until it receives the Commission’s written approval. If
the requested payment is consistent with the terms of the Order, the
Commission shall, within thirty (30) days of the request, give its
written approval to the Escrow Agent or state in writing its denial
of approval and the reasons for its denial.

f. In no event shall any funds paid pursuant to the Order be paid
to, directly or indirectly, any current or former officer, director
or employee of Sumitomo or any other defendant in any Covered Action.

g. The Escrow Funds shall be applied only to pay damages to private
claimants but shall not be applied for the payment of attorneys’
fees or expenses or any other costs incurred in connection with any
aspect of a Covered Action other than as provided in paragraph 4h. To
the extent that the amount of the judgment or settlement of a
relevant action is used as the basis of setting attorneys’ fees
or expenses in a Covered Action, that amount shall not include any
part of the Escrow Funds. The court with jurisdiction over the
Covered Action shall be expressly informed by Sumitomo of the
requirements of this paragraph prior to the court’s
consideration of any application for attorneys’ fees or expenses
or payment of any other costs for which Covered Action Funds are to
be used.

h. The Escrow Agent and Administrator shall be entitled to payment
from the Escrow Funds for all reasonable fees and expenses in
connection with establishment, maintenance and termination of the
Escrow Account. Such payments shall have priority over payments to
claimants pursuant to paragraph 4d, above.

i. The Escrow Agent shall provide monthly reports to the Commission
and Respondent which: set forth details of the disbursement of any
funds from the Escrow Account; itemize the amount of interest accrued
on the account; and itemize allowable expenses paid to the Escrow
Agent in connection with the account.

j. Any Escrow Funds not distributed in accordance with the terms of
paragraphs 4b, 4d and 4h, above, upon the expiration of the Effective
Period, and any funds refunded to the Escrow Account after the
expiration of the Effective Period, shall be deemed a civil monetary
penalty pursuant to §6(c) of the Act and shall be paid
immediately by the Escrow Agent to the United States Treasury. Such
payments shall be made in the manner described in paragraph 3, above.

k. The Escrow Account shall remain open until all of the Escrow
Funds have been paid pursuant to paragraphs 4b, 4d, 4h and 4j, and,
in the event that a payment has been made to a Covered Action Account
Fund, there shall have been a Final Disposition. At such time, the
Escrow Agent shall terminate the Escrow Fund and shall make a final
report pursuant to paragraph 4i.

l. Insofar as any part of this paragraph 4 calls for signed and/or
written notification(s), authorization(s) or communication(s), a fax
transmission shall be a satisfactory means of providing such
notification(s), authorization(s) or communication(s).

5. Sumitomo shall comply with the following undertakings:

a. To cooperate fully with the Commission and its staff in any
investigation, civil litigation or administrative proceeding related
to this proceeding, by, among other things, upon the
Commission’s reasonable request and subject to any legally
cognizable privileges, (1) providing the Commission’s staff with
access, for inspection and copying, to documents within the
possession, custody or control of Sumitomo or any of its
subsidiaries; and (b) actively seeking the cooperation of any
Sumitomo officer, director or employee for interviews, depositions or
testimony. Any such request will be made upon Sumitomo’s
counsel, Martin London and Bruce Birenboim of the law firm of Paul,
Weiss, Rifkind, Wharton and Garrison. Should Sumitomo seek to change
the designated person to receive such requests, notice shall be given
to the Commission of such intention 14 days before it occurs. Any
person designated to receive such requests shall be located in the
United States.

b. Not to take any action or make any public statement denying,
directly or indirectly, any statement in this Order or creating, or
tending to create, the impression that the Order is without a factual
basis; provided, however, that nothing in this provision affects
Sumitomo’s testimonial obligations, or its right to take factual
or legal positions relating to any proceeding to which the Commission
is not a party. Sumitomo will undertake all steps necessary to assure
that all of its agents, attorneys and employees understand and comply
with this agreement.